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Chubb Limited (CB) Q4 Earnings: Is a Beat in the Cards?

We expect property and casualty insurer Chubb LimitedCB to beat expectations when it reports fourth-quarter 2016 results on Jan 31, after the market closes .

Why a Likely Positive Surprise?

Our proven model shows that Chubb has the right combination of two key ingredients to beat estimates this quarter.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.88%. This is because the Most Accurate estimate of $2.50 is higher than the Zacks Consensus Estimate of $2.43. The positive ESP is a meaningful and leading indicator of a likely earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Chubb carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of Chubb's favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Chubb is likely to report top-line improvement in the fourth quarter on the back of its robust organic and inorganic growth portfolio.

Further, the company has likely witnessed an increase in net premiums written owing to the strategic initiatives undertaken. However, Chubb has scaled down its guidance for net premiums for 2016 for a few portfolios.

Chubb expects integration expense savings of about $515 million in 2016.

Also, the company has likely experienced improved net investment income in the to-be-reported quarter. Chubb has estimated fourth-quarter investment income to be between $820 million and $830 million.

Share buyback should also boost for the bottom line.

However, higher loss and loss expenses, policy acquisition costs, administrative expenses and policy benefits are likely to have increased Chubb's expenses. The company has projected 2016 integration and merger-related expenses of $525 million in 2016. Also, fourth-quarter catastrophic loss is anticipated to be about $200 million pre tax, stemming from Hurricane Matthew.

With respect to earnings trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 4.06%.

D/B/A Chubb Limited New Price and EPS Surprise

D/B/A Chubb Limited New Price and EPS Surprise | D/B/A Chubb Limited New Quote

Other Stocks to Consider

Here are some other P&C insurers that you may want to consider as these also have the right combination of elements to post an earnings beat this quarter:

American Financial Group, Inc. AFG , which is set to report fourth-quarter earnings on Feb 1, has an Earnings ESP of +5.56% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

The Allstate Corporation ALL has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is slated to report fourth-quarter earnings on Feb 1.

AXIS Capital Holdings Limited AXS has an Earnings ESP of +6.45% and a Zacks Rank #3. The company is set to report fourth-quarter earnings on Feb 1.

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D/B/A Chubb Limited New (CB): Free Stock Analysis Report

Allstate Corporation (The) (ALL): Free Stock Analysis Report

Axis Capital Holdings Limited (AXS): Free Stock Analysis Report

American Financial Group, Inc. (AFG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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